Occidental Explores $10 Billion Sale of OxyChem Division

Occidental Petroleum is reportedly negotiating the sale of its petrochemicals division, OxyChem, in a potential deal valued at up to $10 billion. This transaction could result in the creation of one of the largest independent petrochemicals companies globally. According to the Financial Times, which cited unnamed sources, the agreement may be finalized within weeks unless unforeseen complications arise.

The identity of the prospective buyer remains undisclosed, and sources indicate that the negotiations could still falter. This potential divestiture aligns with Occidental’s ongoing strategy to streamline operations following significant debt incurred during its $55 billion acquisition of Anadarko. The company’s current debt stands at approximately $24 billion, a reduction from $48.75 billion in September 2019, shortly after the Anadarko deal.

Debt Reduction and Production Goals

Occidental’s debt burden increased again in 2023 after acquiring CrownRock for $12 billion. Despite these financial challenges, the company has established itself as a major player in the shale oil industry. Earlier this year, it ranked among the top ten shale operators, achieving a production rate of 1.22 million barrels of oil equivalent per day. For 2023, Occidental plans to average daily production of 1.422 million barrels, as noted in its second-quarter report.

The company’s financial performance has been affected by fluctuating international oil prices, leading to lower earnings. Currently, the stock has dropped 8% over the past year, with a 4.5% decline year-to-date. The petrochemicals division has generated nearly $5 billion in revenue for the twelve months ending in June, indicating its significant role within Occidental’s overall operations.

The Future of Petrochemicals

The petrochemicals sector is increasingly becoming a focal point for the oil industry, with many analysts projecting it will drive oil demand growth in the coming years. As Occidental considers the sale of OxyChem, the outcome of these discussions may have broader implications for the company’s future trajectory and the overall landscape of the petrochemicals market.

The potential divestiture reflects Occidental’s commitment to enhancing its financial stability while navigating a challenging market environment. As the negotiations progress, stakeholders will be keenly observing how this sale might reshape the company’s operations and its position within the global petrochemicals industry.